Home-owner budgeting: How to balance out rising home loans by switching your home insurance policy

Two terrace houses, joined at the wall. One is cool colours, the other is warmer colours.

After the Reserve Bank of Australia’s decision to hike rates by 0.25% on Tuesday, the cost of being a home-owner in Australia is likely to rise for many, leading to a potential uptick in cases of serious financial stress for those with a mortgage.

The Big Four banks have already indicated how they’ll respond to the RBA’s decision, with ANZ and NAB confirming increases effective as early as 13 May, 2022. It’s expected that more rate rises will follow, too.

So, if you’re one of the nearly 80% of Australians with a Big Four bank home loan, you might be frantically searching for a way to save money to meet the servicing needs of your loan. 

One way could be to compare your home insurance policy to see if you can save on your home-owner costs.

You could save money on your home insurance to put towards your mortgage repayments.

The first step might be to work out how much your home loan repayments are going to change. Mozo’s rate change calculator can help determine how your monthly repayments will rise with a new interest rate. 

Loan details

Rate change

Repayment change if rates go up

Then you’ll want to work out how your monthly repayment increase compares to the amount you’re spending on your home insurance.

For example, say you’ve got $500,000 left to pay off on your 3% variable home loan and have 25 years left on your loan term. If your lender has made the decision to pass on a 0.25% rate increase on your standard variable home loan, your monthly repayment will increase from $2,371 to $2,437 - that’s a difference of $66, which over the long-term becomes a significant chunk of extra expenses.

See how rates are moving with Mozo’s rate change tracker. Now with this extra cost established, you can compare home insurance policies to maybe find an opportunity to cut back your overall expenses.

Compare home insurance policies

By comparing home insurance policies, you could potentially find a better option, switch and ultimately save on your home insurance. 

Alternatively, there are a few things which you might be able to do to reduce your overall home insurance cost in both the short and long terms.

Six tips to save on your home insurance

  1. Increase your excess to reduce your home insurance premiums. While this might reduce the cost of your insurance premium in the short-term, making a claim on your policy will end up being more expensive. So, there’s a degree of risk here.
  2. Buy your policy online and you might be able to save on your home insurance with providers that offer such incentives. 
  3. Multi-policy discounts may be available through some providers. So if you need home insurance and a car insurance policy as well, you might be able to switch and save by buying more than one policy with the same provider. 
  4. Increase your home security and your premium may drop, as the providers will see your home as less likely to be broken into. Providers ask about security features like burglar alarms, security screens, and the types of locks you have on your doors when working out your premium. So, if you haven’t already bolstered your home security, then it might be worth doing (for more than one reason). 
  5. Pay your premiums annually and some providers might give you a discount. It’s almost like a loyalty bonus, where you commit to a year on the one policy. But beware, different providers have different policies on cancellations. 
  6. Only buy the extras you need and you might be able to save lots by trimming the fat on your policy. A leaner policy, filled only with what you think you’ll actually require, could reduce the cost of your premium significantly.

Check out some of the home insurance providers Mozo has in its database below, or check out the best home insurance policies for 2022.

Compare home insurance - rates updated daily

Search promoted home insurance below. Advertiser disclosure. Important information on terms, conditions and sub-limits.
  • Home Buildings Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
      Optional Extra
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    Optional ExtraUp To 25% Of Sum Insured
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Everyday Comprehensive Home and Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Home & Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    No
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Home Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
      Optional Extra
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    Optional ExtraUp To 25% Of Home Sum Insured.
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Home Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
    No
    Go to site
    Details